Other remedial changes
2012 remedial changes to the Income Tax Act 2007 and Tax Administration Act 1994 covering FIFs, currency conversion rules, company tax rate and more.
Sections HA 8B, DX 3, IQ 2B(11), YA 1 and schedule 31 of the Income Tax Act 2007, and section 183AA(4)(b) of the Tax Administration Act 1994
Section HA 8B has been amended to remove a reference to "attributing". This clarifies that qualifying companies cannot hold any non-portfolio interests in FIFs (including non-attributing active FIFs and FIFs that qualified for the grey list exemption). This change was necessary as qualifying companies would otherwise be able to distribute dividends from such FIFs with no further tax impost. This would have been inconsistent with the fact that such dividends would have been taxable if they were paid directly to non-company shareholders.
Section DX 3 has been repealed with effect from the 2013-14 income year. This repeal was missed when other provisions relating to supplementary dividend holding companies were repealed in an earlier amending act.
A new subsection IQ 2B(11) provides an explicit currency conversion rule for determining carried-forward losses during a transitional period from the old to the new international tax rules. An explicit rule was not provided at the time the transitional rule was first enacted. The rule follows, broadly speaking, the existing treatment of foreign currency amounts in subpart YF. The amendment has retrospective effect.
The section YA 1 definition of "old company tax rate", which is used for imputation credit transitional rules, has been updated to account for two old rates, 30% and 33% and the fact that the company tax rate reduced to 28% from 2011-12.
The table in schedule 31 has been updated to provide the correct abatement figures for Working for Families tax credits.
Section 183AA(4)(b) of the Tax Administration Act 1994 has been re-enacted to ensure it has the right effective date. This corrects an error in the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010.